LEGAL LAUNDERING Part 2

The Growing Use of Candidate Committees To Mask Special Interest Contributions

October 17, 2000

INTRODUCTION

In 1999 the Wisconsin Democracy Campaign issued a report called “Legal Laundering” which revealed how the Republican and Democratic caucuses and legislative campaign committees are used by legislative leaders to attract special interest contributions and how those resources are used to benefit legislative candidates at election time.

These committees contribute to the escalating cost and negative tone of legislative campaigns because they are magnets for nearly unlimited contributions by lobbyists and powerful special interests who curry favor with legislative leaders in order to advance their narrow agendas. In turn, the contributions collected by these committees strengthen the bond of special interest influence over all who subsequently benefit from this money. The committees spent about $2 million on direct contributions to candidates and “aid” to legislative campaigns in the 1996 and 1998 elections, including advertising, consulting, polling and campaign materials.

As election 2000 approaches, a WDC analysis has found yet another method by which special interest money is legally laundered and spread among candidates to fuel the spiraling cost of legislative campaigns and spread special interest influence. This report, “Legal Laundering, Part 2: The Growing Use of Candidate Committees To Mask Special Interest Contributions,” examines the sudden surge in inter-candidate committee contributions. The report’s key points are:

Contributions by candidate committees to other legislative candidate committees totaled more than $125,000, from Jan. 1, 1999 to Aug. 28, 2000. That is a 77 percent increase from inter-candidate committee contributions for the same period in the 1998 election cycle and a 306 percent increase from the comparable period in the 1996 election cycle.

It has been in vogue in recent years for many legislative candidates to refuse political action committee (PAC) money and declare themselves free from special interest influence. However, some of those same candidates accept laundered PAC contributions vis-à-vis donations from colleagues whose candidate committees receive PAC money. The claim is disingenuous to voters and reduces disclosure. At least three candidates - two Republicans and a Democrat -- are rejecting PAC money, but they are accepting contributions from candidate committees that receive thousands of dollars from PACs.

Many voters don’t realize that the money they contribute to a candidate’s campaign may be used as contributions to other candidates they don’t know or with whom they may disagree. Most of the candidates who contributed to other candidate committees did not have to run for reelection, did not have an opponent or resided in politically safe districts. Curiously, one Democratic senator doled out thousands of dollars to colleagues in 1999, more than a year before the elections and during deliberations on the 1999-2001 state budget.

CANDIDATE COMMITTEE CONTRIBUTIONS

Contributions between legislative candidate committees have increased sharply since the 1996 elections (see chart below). An analysis of contributions from the start of each election cycle through the preprimary reporting period in each cycle (late August) shows that contributions between candidate committees totaled $125,038 in 2000, a 77 percent increase over $70,692 in 1998 and a 306 percent increase over $30,813 in 1996.

CANDIDATE COMMITTEE CONTRIBUTIONS
FROM THE START OF THE ELECTION CYCLE
TO THE PREPRIMARY REPORTING PERIOD

The analysis shows that Republican candidates engage in inter-candidate committee contributing more than Democrats. However, Democratic candidates have shown a marked increase in such contributions in the current election cycle. Republican candidate committee contributions from the start of each cycle through the preprimary reporting period in 1996 and 1998 accounted for 73 percent and 87 percent of all such contributions, respectively. In the current cycle, Republican candidate committee contributions made up 58 percent, or $72,903, of the total $125,038.

The increasing use of these committees to collect and redistribute large contributions effectively clouds disclosure and masks the influence that special interests have on the legislature and public policy. Legislators who make contributions to colleagues also are buying loyalty to their personal agendas.

RECIPIENTS OF CANDIDATE COMMITTEE CONTRIBUTIONS

Special election and open seat candidates, challengers and “targeted” incumbents in swing districts receive the bulk of the candidate committee contributions (Table 1). Twenty-two legislative candidates - 11 Republicans and 11 Democrats - received $2,000 or more of their contributions from other legislative candidate committees.

*Represents legislative candidate committees that have received $2,000 or more from other legislative candidate committees

The leading recipient was Republican candidate Ted Nickel, an unsuccessful candidate in the special election for the 35th District Assembly seat in spring 1999. Nickel collected $7,260, or 8 percent, of his total contributions from other legislative candidate committees around the state. Rounding out the top five are Republican challengers Dave Duecker and Donald Friske, incumbent one-term Republican Rep. Joseph Leibham of Sheboygan and Democratic Rep. Mark Meyer of La Crosse who is running as an open seat candidate in the Senate 32nd District.

Only two of the top 22 are incumbents, whose races are targeted - Leibham and Democratic Sen. Alice Clausing of Menomonie.

The table includes at least three candidates who pledged not to take PAC money in order to claim their independence from special interests. They are Duecker, who is challenging Democratic Sen. Robert Wirch of Kenosha; Republican Lisa Nelson, who is challenging Democratic Senate Majority Leader Charles Chvala of Madison; and Clausing. Collectively, these candidates received $11,301 from candidate committees and nothing directly from PACs as of Aug. 28.

However, they are accepting PAC money when they accept contributions from candidate committees that received PAC money.

CANDIDATE COMMITTEE CONTRIBUTORS

Most candidate committee contributions were made by incumbents who are not up for reelection or who had no opponents or who resided in politically safe districts. Twenty-one incumbents and three former legislators - 15 Republicans and nine Democrats - gave $2,000 or more to their colleagues (Table 2).

Table 2
TOP** TOTAL CONTRIBUTIONS
FROM CANDIDATES COMMITTEES
TO OTHER LEGISLATIVE CANDIDATE COMMITTEES
January 1999 - August 28, 2000

CANDIDATE COMMITTEE

OFFICE

STATUS**

PARTY

AMOUNT

Friends of Rod Moen

S31

I

D

$13,000

Friends & Neighbors of John Gard

A89

I

R

$7,500

Citizens for Richards

A19

I

D

$6,200

Friends of Riley

A18

I

D

$5,250

Friends of Peter Bock

A07

I

D

$5,214

Citizens for Bonnie Ladwig

A63

I

R

$4,800

Friends of Shirley Krug

A12

I

D

$4,050

Friends & Neighbors of Panzer

S20

I

R

$4,000

Friends & Neighbors of Brian Rude

S32

R

R

$3,500

Friends of Jeff Plale

A21

I

D

$3,050

Friends of Scott Walker

A14

I

R

$3,000

Breske for Senate

S12

I

D

$3,000

Citizens for Frank Lasee

A02

I

R

$2,950

Citizens for Joe Leean

S14

R

R

$2,800

Moore for Senate

S04

I

D

$2,500

Friends for Glenn Grothman

A59

I

R

$2,500

Friends of Urban

A99

I

R

$2,450

Brandemuehl for Assembly

A49

R

R

$2,150

Friends of Greg Huber

A85

I

D

$2,100

Powers for Assembly

A80

I

R

$2,000

Friends of Alberta Darling

S08

I

R

$2,000

Citizens for Kedzie

A43

I

R

$2,000

Friends for Farrow Committee

S33

I

R

$2,000

M. Lehman for Assembly

A58

I

R

$2,000

**Represents candidate committees that have contributed at least $2,000 to other legislative candidate committees.
***“I” means Incumbent and “R” means Retired from Legislature.

Democratic Sen. Rodney Moen of Whitehall contributed the largest amount to colleagues’ campaigns - $13,000 between January 1999 and Aug. 28, 2000, almost twice as much as the next contributor. The timing of Moen’s contributions is curious because he made $10,000 worth of them - mostly in amounts of $1,000 - in 1999 while he and his colleagues were considering policy and spending items in crafting the Senate Democrats’ version of the 1999-2001 state budget. Most candidate committee contributions occur in the fall of the election year.

Among the budget provisions of interest to Moen and supported by majority Senate Democrats was one allowing Ashley Furniture Industries to fill in part of a wetland in order to expand their Trempealeau County business. Owners and employees of Ashley, which is in Moen’s district, are his second largest group of contributors - when viewed by employer - at $1,800.

Others who made contributions to colleagues through their candidate committees include Republican Rep. John Gard of Peshtigo and Democratic Reps. Jon Richards, Antonio Riley and Peter Bock, all of Milwaukee. Gard is a veteran legislator and co-chair of the powerful Joint Finance Committee who faces only token opposition from a Democratic challenger in this heavily Republican district. Richards and Riley have no general election opponents and represent Democratic strongholds, as does Bock, a veteran legislator who faces only token opposition.

CONCLUSION

These candidate committee contributions don’t represent a few dollars being donated in order to support the effort of a long time friend or respected colleague who is fighting to keep his or her job. These committees and their contributions are being used to mask special interest money and to shore up loyalties and attract support for a legislator’s own agenda. More times than not, this strategy is used by legislative leaders - through resources from the legislative campaign committees they control and their personal campaign committees - to keep members of their caucus in step on key policy items and other political issues. However, this method of getting narrow, special interest items through the legislative process is also being used by others. Even rank-and-file legislators apply the methods of special interests by using money rather than the merits of good public policy to move items through the legislative process.

Many candidate committees dole out thousands of dollars of their constituent and special interest contributions to other candidates across the state. Even though a voter’s contribution to a candidate becomes the candidate’s money to use, it’s unlikely that many voters know that their candidate can legally contribute thousands of dollars from their campaign coffers to colleagues that the voters may never know or would not support.

Perhaps the most serious result of this use of candidate committee contributions is that it further reduces the confidence and participation of voters in the political process because that individual’s contribution - an expression of support for a candidate’s position on important public policy matters - is being redistributed and used to promote a more narrow special interest agenda.